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SINGTEL CDI 1:1 (SGT)

The leading provider in Singapore of international and local telephone services, mobile communication services, data communications services and postal services. Also a leading integrated communications service provider in the Asia Pacific region with of

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The push by Telstra and SingTel-Optus into cloud computing and technology services that has reaped both ­companies billions of dollars could start to slow within five years, analysts have warned.

On Wednesday, Optus announced it had beat Telstra to win a $60 million contract with Virgin Australia to supply and manage its telecommunications and technology services around the world.

Optus business managing director John Paitaridis said the deal was negotiated over six months, worth $60 million over five years and had originally been serviced by Telstra.

Both companies have been duelling for dominance in the cloud computing and technology service market.

Telstra’s Network Applications and Storage (NAS) business provides corporate and government customers with cloud computing and video conferencing services. It’s one of Telstra’s fastest growing units, with revenue rising 17.7 per cent to hit $1.49 billion in the year ending June 30.

The company plans to use the NAS division to grow its cash flow as income from its fixed line phone call and Yellow Pages ads shrink.

“We’re connecting all of Virgin Australia’s employees, both Australia-wide and internationally,” he said. “So anyone who is on a data or voice service is connected via the Optus network now.”

“We have structured our organisation around this ICT capability. . . and we’re seeing strong double-digit percentage growth now in the business as a result of that.”

When asked about Telstra’s increasingly frequent wins and expansion into the Asian region, Mr Paitaridis said Optus was the most trusted partner of choice for customers going into Asia.

“What is unique to us is the ability to provide an end-to-end service because we’ve got strong networks both. . . wireless and wireline, and regional networks that are unparalleled,” he said. “We’ve got 12 data centres in the region. . so when we speak with clients, there’s a genuine fit.”

Smaller providers suffer

Ovum research director Kevin ­Noonan said both companies were reaping revenue increases by offering services at a price that was ­driving smaller technology service providers out of business. “Both of them have been pushing this hard [and] the smaller boutique service providers are feeling the pinch,” he said. “There are commodity areas of technology where price and size of offering will just win through.

“The money right now is with the big players that can offer big discounts.”

“The big driver is refresh cycles when existing contracts with overseas providers like your IBMs. . . expire,” he said. “So the party stops to some extent when you’ve gotten through most of those contracts.

“A lot of five and 10-year managed service contracts for hundreds of millions of dollars are now being ­retendered, so there’s a five-year ­window where all of that stuff will come through.”

Separately, Telstra announced on Wednesday it had won a $71 million contract with Australia Post to supply 26,000 hand-held scanners that will be used to improve parcel tracking.

The contract will include access to Telstra’s mobile network so that customers can see exactly where their packages are.